House prices across parts of Queensland could rise as much
as $70,000 in a matter of months in some suburbs, if the four interest rate
cuts predicted by the big banks eventuate.

Exclusive data from Ray White reveals the impact of rate
cuts on house prices in 2011, 2015, 2016, and 2019, with the research showing
an average rise in values of up to 1 per cent in 414 suburbs in the month
immediately after each cut.

The analysis shows the suburbs with the largest average
increase in house prices post a rate cut are on the Gold and Sunshine Coasts,
with Palm Beach and Miami both recording typical gains of 1 per cent in a
month.

That means if interest rates were to be cut tomorrow, the
median house price in Palm Beach could immediately rise by $17,546.

With financial markets pricing in four interest rate cuts in
the next 12 months — starting as soon as December — that could mean a $70,184
rise in Palm Beach’s average house price.

Homeowners in Noosa Heads, where the median house price is
$2.23m, could expect to pocket equity gains of about 0.8 per cent, or $18,716,
in the month after each rate cut — that’s a whopping $74,864 after four cuts.

In Brisbane, the suburbs that recorded the strongest jumps
in home prices after previous rate cuts are on the southside, with Camp Hill
topping the list with forecast average growth of 0.6 per cent or $9,879,
followed by Tarragindi, Holland Park, and Highgate Hill.

Ray White chief economist Nerida Conisbee said the impact
from the next rate cut could be even bigger than history dictated in some
areas, and as little as a month away.

Ms Conisbee said that while Brisbane had historically had a
more mild reaction to interest rate movements, it was more likely to record
larger price jumps this time as home buyers were already highly confident.

Another key to the rate cut’s impact on home values would be
in how the Reserve Bank announced it, she said.

“If most people are expecting four cuts next year, that will
change sentiment to be far more positive,” Ms Conisbee said.

But the big factors will still be the cost of living, the
supply of new homes and population growth.

“Population is still moving and that is fundamentally the
driver of prices,” Ms Conisbee said.

“Especially if you don’t build enough housing.”

The economist said she believed there would be a rate cut
this year or by March at the latest, but that it would only be a 0.25 per cent
improvement for mortgage holders.

While the firm’s analysis tracked what would happen in that
situation, she said a 0.5 per cent cut could cause an even larger increase in
home values.

“I don’t think it would double the benefit, but it could
lead to a bigger increase,” Ms Conisbee said.

Ms Conisbee said coastal lifestyle hubs along the Gold and
Sunshine Coasts were the most likely to benefit from a rate cut, based on
historic trends.

A rate cut could also help “stabilise” the rental market, as
many landlords had raised rents to accommodate heightened interest payments for
their investments.

“If that cost goes down, it won’t be so hard to pay a loan
and you might not be so motivated to raise rents,” Ms Conisbee said.

But it’s not all good news for the property market.

“There’s always a risk to affordability when prices rise,”
Ms Conisbee said.

“So for first-home buyers, a fast-moving market could be
challenging. If someone wanting to buy a $700,000 home finds it has gone to
$720,000, they will need a bigger deposit.”

It comes as NAB this week revised its cash rate cut
forecast, bringing forward the timing of the first cut from May to February
2025 — in line with the forecasts of Westpac and ANZ.

CBA is the only major bank expecting the first RBA cut to
come one meeting earlier in December 2024.

According to Canstar, a rate cut of 0.25 per cent would
result in the monthly repayments for a $600,000 loan and 25 years remaining
drop by $92.

Canstar data insights director Sally Tindall, said a rate
cut in February was looking likely if core inflation continued to track in the
right direction, or unemployment started to accelerate.

“All four big banks now believe the RBA will be ready to cut
the cash rate in just over four months’ time, if not before, in the case of
CBA,” Ms Tindall said.

“However, the outlook for both inflation and unemployment is
still highly uncertain. A couple of wobbly sets of inflation data could see the
RBA holding for longer, particularly if unemployment remains relatively steady.

“If the Reserve Bank of Australia doesn’t know exactly when
cash rate cuts will eventuate, don’t go putting them into your own budget.

“The one thing borrowers can do ahead of time is get
themselves on the lowest rate possible. That way when that first cut does land,
it will actually be their second.”

Apollo Auctions Director Justin Nickerson said smart buyers
were making their moves now before interest rate cuts eventuated.

“Southeast Queensland and Perth remain the strongest markets
with auction clearances above 60 per cent over the past three months,” Mr
Nickerson said.

 Read the whole story here https://www.realestate.com.au/news/where-house-prices-could-rise-up-to-70k-when-rates-are-cut/